CHAPTER 4 DATA FINDINGS 4.1. Overview of FDI in Bangladesh

Inter. Business Management M.B.A. (International)

Mr. Md. Mamun Howlader Student ID: 5417190025

4.0. Introduction

This chapter mainly presents data findings of FDI overview in Bangladesh and its

economic growth based on secondary data. And secondary data were collected from various

books, journal report, e-books, government website and many other websites.

4.1. Overview of FDI in Bangladesh

4.1.1. Foreign Direct Investment in Bangladesh

Foreign Direct Investment (FDI) has played a key role in the modernizat

Bangladesh economy for the last 15 years.

4.1.2. Inflows of Foreign Direct Investment

The figure 2 and figure 3

$792.48 m, in 2007 was $666.36 m, in 2008 was $1086.31 m, in 2009 was 7

was 913.32. As of 2011, inflows of foreign direct investment recorded to $1136.38m (Source:

Bangladesh Board of Investment).

Figure 2: Inflows of Foreign direct investment during 2005

Source: World Investment Report



CHAPTER 4

DATA FINDINGS



books, government website and many other websites.

rview of FDI in Bangladesh

Foreign Direct Investment in Bangladesh

Foreign Direct Investment (FDI) has played a key role in the modernizat

Bangladesh economy for the last 15 years.

4.1.2. Inflows of Foreign Direct Investment

The figure 2 and figure 3 shows that inflows of foreign direct investment in 2006 was

$792.48 m, in 2007 was $666.36 m, in 2008 was $1086.31 m, in 2009 was 7


Bangladesh Board of Investment).

Inflows of Foreign direct investment during 2005-2010

Source: World Investment Report 2011

Inter. Business Management M.B.A. (International) /1




books, government website and many other websites.

Foreign Direct Investment (FDI) has played a key role in the modernization of the

shows that inflows of foreign direct investment in 2006 was

$792.48 m, in 2007 was $666.36 m, in 2008 was $1086.31 m, in 2009 was 700.16m, in 2010




Figure 3: Inflows of Foreign direct investment during 2006


Private Investment Statistics

Table 2: Private Investment Statistics

Year Proposed Local

Investment

Project BDT

2005-2006 1754 18370

2006-2007 1930 19658

2007-2008 1615 19553

2008-2009 1336 17117

2009-2010 1470 27414

2010-2011 1298 39976

2011-2012 1604 497078

* March, 2012

Source: Bangladesh Economic Review



Inflows of Foreign direct investment during 2006-2011


Private Investment Statistics

Proposed Local

Investment

Proposed

Foreign

Investment

Total Proposed

Investment

BDT Project BDT Project BDT

18370 135 24986 1889 43356

19658 191 11925 2121 31583

19553 143 5433 1758 24986

17117 132 14749 1468 31867

27414 160 6261 1630 33678

39976 148 26935 1446 66912

497078 209 338910 1813 835989

Bangladesh Economic Review-2011 (Bangla version), Ministry of Finance



Total Proposed

Investment

Growth

%

BDT

43356 124.62

31583 -27.15

24986 -20.89

31867 27.54

33678 5.67

66912 98.71

835989 212

Ministry of Finance



Foreign and Joint Venture Investment

In the year 2009-10 (February), there were 89 new foreign and joint venture

investment projects registered to BOI which amount to $590m. The projects were

invested to mainly in the service, engineering, clothing and agricultural sectors.

Figure 4: Sectorwise foreign and joint venture investment during 2010


Table 3: Country wise foreign and joint vent

Country

Saudi Arabia

Australia

USA

Finland

India

South Korea

Malaysia

Netherlands

China



Investment

10 (February), there were 89 new foreign and joint venture



Sectorwise foreign and joint venture investment during 2010


Country wise foreign and joint venture investment during 2009

No. of Projects Proposed Investment (US$ m)

3

4

5

2

9

12

3

5

12



10 (February), there were 89 new foreign and joint venture



Sectorwise foreign and joint venture investment during 2010-2011

Ministry of Finance

ure investment during 2009-2010

Proposed Investment (US$ m)

478.652

2.036

2.990

3.023

8.451

33.768

3.056

8.544

21.000



United Kingdom

Pakistan

Japan

Denmark

Sri Lanka

Canada

Taiwan

Singapore

Turkey

Greece

Italy

Hong Kong

Total

As of February, 2010


4.2. Investment and Trade

Bangladesh has attracted substantial amounts of foreign direct investment in the

last ten years.

1. Bangladesh's economic and fiscal reforms, improvements in infrastructures and

developing industry clusters have been amongst the main local stimuli to FDI.

2. Nevertheless the country continues to compete hard for every investment dollar!

3. Despite the pressures from other competitive economies Bangladesh remains, in

the eyes of many investors, the most cost competitive and industrious location to

set up a foreign subsidiary company



5

2

8

1

2

2

1

4

1

1

2

5

89



Bangladesh's economic and fiscal reforms, improvements in infrastructures and


Nevertheless the country continues to compete hard for every investment dollar!

Despite the pressures from other competitive economies Bangladesh remains, in


set up a foreign subsidiary company (Source: Bangladesh Board of Investment).



3.507

0.990

2.624

1.217

0.646

1.017

0.502

1.929

0.150

0.156

1.039

14.805

590.102

Ministry of Finance


Bangladesh's economic and fiscal reforms, improvements in infrastructures and


Nevertheless the country continues to compete hard for every investment dollar!

Despite the pressures from other competitive economies Bangladesh remains, in


(Source: Bangladesh Board of Investment).



Figure 5: FDI continues to develop the Bangladesh economy

Source: Bangladesh Economic Review 2011 (Bangla Version)

Figure 6: Bangladesh Exports $m

(As of March 2011)


4.2.1. Investment Climate in Bangladesh

Positive Climate



FDI continues to develop the Bangladesh economy


Bangladesh Exports $m


Investment Climate in Bangladesh





A largely homogeneous society with people living in harmony irrespective of race

and religion, Bangladesh is a democratic country enjoying broad bi-partisan political

support for private investment. The legal and policy framework for business is conducive

to foreign investment.

Investment Climate

Bangladesh offers an unparalleled investment climate compared to the other South

Asian economies. Here are eight key pointers to Bangladesh's investment climate today.

1. Bangladesh is a largely homogeneous society with no major internal or external

tensions and a population with great resilience in the face of adversity (e.g.

natural calamities).

2. Bangladesh is a liberal democracy. The population of this country irrespective of

race or religion have been living in harmony and understanding for thousands of

years.

3. Broad non-partisan political support for market oriented reform and the most

investor-friendly regulatory regime in South Asia.

4. Trainable, enthusiastic, hardworking and low-cost (even by regional standards)

labor force suitable for any labor-intensive industry.

5. The geographic location of the country is ideal for global trade, with very

convenient access to international sea and air routes.

6. Bangladesh is endowed with abundant supply of natural gas, water and its soil is

very fertile.

7. Although Bengali (Bangla) is the official language, English is generally used as a

second language. The majority of the educated population can read, write and

speak in English.

As a result of low per capita GDP, present domestic consumption is not

significant. However, it should always be considered that there exists a middle class with

over 10% of the population. As economic growth picks up, the purchasing power will

also grow substantially.

Bangladeshi products enjoy duty free and quota free access to almost all the

developed countries. This access to the global market is further helped by the fact that



the policy regime of Bangladesh for foreign direct investment is by far the best in South

Asia. Most Bangladeshi products enjoy complete duty and quota free access to EU,

Canada, Australia and Norway. Though in limited scale, Bangladesh products already

found their access with lower duty in the markets of Thailand, India and Pakistan.

However, talks are underway with China, Russia, Malaysia and other neighboring

countries in this regard.

(Source: Board of Investment, Bangladesh Government Website)

4.3. World Economy and Bangladesh

The developing world has not been as much affected by the global recession as

the developed world.

In 2008-09, the economic growth rate of developed economy was -3.4%, whereas

that of emerging and developing economies was 1.7%.

Asian countries, including Bangladesh, performed better than others. A few

economies of the world (USA, Japan, France, Korea, Germany and UK) started

recovering from the second half of 2009.

The recovery may be more extensive in 2010, but at a slower rate.


Table 4: Economic Growth Rate

Economic growth rate (%) Projections

2007 2008 2009 2010 2011 2015

Bangladesh 6.3 6.0 5.4 5.4 5.9 6.2

Developing Asian economies 10.6 7.9 6.6 8.7 8.7 8.5

Emerging economies and developing

economies

6.5 9.2 5.2 6.2 4.7 3.8

Developing economies 0.2 0.5 0.4 0.4 0.3 0.1

World 5.2 3.0 -0.6 4.2 4.3 4.6

Source: IMF World Economic Outlook, April, 2010

Table 5: Comparative scenario of Economic Growth in selected Asian Countries

Economic growth rate (%) Projections

200 200 200 201 2011 2015



7 8 9 0

Bangladesh 6.3 6.0 5.4 5.4 5.9 6.2

Cambodia 10.2 6.7 -2.6 4.8 6.8 6.8

China 13.0 9.6 8.7 10.0 9.9 9.5

India 9.4 7.3 5.7 8.8 8.4 8.1

Malaysia 6.2 4.6 -1.7 4.7 5.0 5.0

Singapore 8.2 1.4 -2.0 5.7 5.3 4.5

Thailand 4.9 2.5 -2.3 5.5 5.5 5.0

Vietnam 8.5 6.2 5.3 6.0 6.5 7.5

Source: IMF World Economic Outlook, April, 2010

4.4. Export Processing Zones in Bangladesh

Export Processing Zones (EPZs) are export oriented industrial enclaves which provide

the infrastructures, the facilities, administrative and support services for a wide variety of

enterprises. Bangladesh’s highly successful EPZs in Dhaka and Chittagong are now

complemented by new EPZ developments and other valuable real estate developments

around the country.

The Bangladesh Export Processing Zones Authority (BEPZA) is the official organ of

the government to promote, attract and facilitate foreign investment in the Export Processing

Zones. The primary objective of an EPZ is to provide special areas where potential investors

would find a congenial investment climate, and location free from cumbersome procedures.

Businesses from 32 countries have so far invested in the existing zones.

There are currently eight zones with others due to open in the next few years.

EPZ-Adamjee

EPZ-Chittagong

EPZ-Comilla

EPZ-Dhaka

EPZ-Ishwardi

EPZ-Karnaphuli

EPZ-Mongla



EPZ-Uttara


4.4.1. Incentives & Facilities

Fiscal Incentives

10 years tax holiday for the Industries to be established before 1st January, 2012 and

Industries to set up after 31st December, 2011 tax holiday period will be:

Table 6: Tax Exemption Period and Rate of Tax Exemption

Tax exemption period Rate of tax exemption

First 02 years (1st and 2nd Year) 100%

Next 02 years (3rd and 4th Year) 50%

Next 01 years (5th Year) 25%

Source: BEPZA

2. Duty free import of construction materials

3. Duty free import of machineries, office equipment & spare parts etc.

4. Duty free import and export of raw materials and finished goods

5. Relief from double taxation

6. Exemption from dividend tax

7. GSP facility available

8. Accelerated depreciation on machinery or plant allowed

9. Remittance of royalty, technical and consultancy fees allowed

10. Duty & quota free access to EU, Canada, Norway, Australia etc.

Non-Fiscal Incentives

1. 100% foreign ownership permissible



2. Enjoy MFN (most favored nation) status

3. No ceiling on foreign and local investment

4. Full repatriation of capital & dividend

5. Foreign Currency loan from abroad under direct automatic route

6. Non-resident Foreign Currency Deposit (NFCD) Account permitted

7. Operation of FC account by 'B' and 'C' type Industries allowed.

Facilities

1. No UD, IRC, ERC and renewal of Bond license

2. Work permits issued by BEPZA

3. Secured and protected bonded area

4. Off-Shore banking available

5. Import on Documentary Acceptance (DA) basic allowed

6. Bank of Back L/C

7. Import and Export on CM basis allowed

8. Import from DTA (Domestic Tariff Area)

9. 10% sale to DTA (Domestic Tariff Area)

10. Customs clearance at factory site

11. Simplified sanction procedure

12. Sub-contracting with export oriented Industries inside and outside EPZ allowed

13. Relocation of foreign industries allowed

14. Accords Resident ship and Citizenship

15. One Window same day service and simplified procedure.

4.4.2. Year wise Investment in EPZ

Table 7: Year wise Investment in EPZ

Year Current Cumulative



2006-07 152.37 1,132.26

2007-08 302.19 1,434.45

2008-09 148.03 1,582.47

2009-10 211.99 1804.46

2010-11 313.23 2117.69

2011-12 (March,12) 264.68 2382.38

Growth (2010-2011) 41%

Source: BEPZA

4.4.3. Overview of EPZ

Table 8: Overview of EPZ

Name of

EPZ

No. of industries Investment

(m US$)

Export (m

US$)

Employment

ManufacturingUnder

implementation

Chittagong 161 15 801.86 12,384.12 1,55,121

Dhaka 98 06 738.41 10,259.24 78,985

Comilla 26 18 122.33 497.18 9,040

Mongla 06 06 2.66 65.09 152

Uttara 08 04 10.19 5.68 4,023

Ishwardi 08 11 31.09 27.08 4,407

Adamjee 21 27 110.98 143.35 14,163

Karnaphuli 23 27 118.34 166.97 16,501

Total 351 114 1,935.86 23,548.71 282,392

Source: Bangladesh Economic Review-2011 (Bangla version), Ministry of Finance

4.4.4. FDI Magazine's rankings



FDI Magazine of The Financial Times in March 2010 conducted a competition

entitled “Global Ranking Competition of Economics Zones” based on the following nine

categories of ranking:

Best Overall Global Special Economic Zone

Best Economic Potential

Best Cost Effectiveness

Best Facilities

Best Transportation Link

Best Incentives

Best Promotion

Best Airport

Best Port

In the competition out of 700 Economic Zones globally 200 participated in the

competition. All the zones were evaluated on a 10 point scale on the basis of some set

criteria. Among the top 10 of the two categories Chittagong Export Processing Zone,

Bangladesh scored 3rd position in the “Best Cost Effectiveness” and also 4th position in

the “Best Economic Potential” for 2010-2011. (Source: FDI Magazine)

4.5. Government and Policies

Bangladesh is a moderate, democratic and homogeneous country. It is a

constitutional republic with a multi party parliamentary democracy. Elections are held on

the basis of universal suffrage.

Government has initiated various supportive policy initiatives to promote socioeconomic

development. The key features of the Government industrial policy are indicated here:

To expand the production base of the economy by accelerating the level of

industrial investment.

To promote the private sector to lead the growth of industrial production and

investment.

To focus the role of the government as the facilitator in creating an enabling

environment for expanding private investment and sustained economic growth.



To permit public undertaking only in those industrial activities where public

sector involvement is essential to facilitate the growth of the private sector and /

or where there are over riding social concerns to be accommodated and private

initiatives absent.

To attract foreign direct investment in both export and domestic market oriented

industries to make up for the deficient domestic investment resources, and to

acquire evolving technology and gain access to export markets.

To ensure rapid growth of industrial employment by encouraging investment in

labor intensive manufacturing industries including investment in efficient small

and cottage industries.

To generate female employment in higher skill categories through special

emphasis on skill development.

To raise industrial productivity and to move progressively to higher value added

products through skill and technology upgrading.

To enhance operational efficiency in all remaining public manufacturing

enterprises through appropriate management restructuring and pursuit of market

oriented policies. To diversify and rapidly increase export of manufactures.

To ensure a process of industrialization this is environmentally sound and

consistent with the resource endowment of the economy.

To encourage balanced industrial development throughout the country by

introducing suitable measures and incentives.

To effectively utilize the existing production capacity.

To coordinate all macroeconomic policies.

To develop indigenous technology and to expand production based on domestic

raw materials and inputs.

To rehabilitate and support deserving sick industries.

(Source: Bangladesh Board of Investment Government website)

4.5.1. Digital Bangladesh

The use of information and communication technology has been playing a vital

role in the 21st century due to globalization and the government is encouraged to

adapting with the coming future. The democratic government has declared the “Vision

2021” in the election manifesto which targets establishment of a resourceful and modern



country by 2021 through effective use of information and communication technology-a

"Digital Bangladesh".

“Digital Bangladesh” does not only mean the broad use of computers, perhaps it

means the modern philosophy of effective and useful use of technology in terms of

implementing the promises in education, health, job placement, poverty reduction etc.

Therefore, the government underscores a changing attitude, positive thinking and

innovative ideas for the success of “Digital Bangladesh”.

The philosophy of “Digital Bangladesh” comprises ensuring people’s democracy

and rights, transparency, accountability, establishing justice and ensuring delivery of

government services in each door through maximum use of technology-with the ultimate

goal to improve the daily lifestyle of general people. Government’s “Digital Bangladesh”

includes all classes of people and does not discriminate people in terms of technology.

Hence, government have emphasized on the four elements of “Digital Bangladesh

Vision” which are human resource development, people involvement, civil services and

use of information technology in business. (Source: Bangladesh Board of Investment

government website)

4.5.2. Government Vision 2021

The government is committed to building a country whose citizens are able to live

prosperous and happy lives. The year 2021 will mark the golden jubilee of Bangladesh’s

independence, while the year 2020 will be the hundredth anniversary of the birth of the

father of the nation, Bangabandhu Sheikh Mujibur Rahman.

We envision a democratic system where people choose their government freely

and get services from it without hassle, enjoy freedom from fear and intolerance, live

with dignity; where every citizen is assured of social justice, environmental protection,

human rights and equal opportunities; and where the rule of law and good governance

flourish. We envision a liberal, progressive and democratic welfare State.

Simultaneously we envision a Bangladesh which by 2020/2021, will be a middle income

country where poverty will be drastically reduced where, our citizens will be able to

meet every basic need and where development will be on fast track, with ever-increasing



rates of inclusive growth. (Source: Bangladesh Board of Investment government

website)

4.5.3. Bangladesh as we want to see it in 2021

1. Democracy and effective parliament

Democracy and strong democratic institutions will be established for holding

reliable election at regular intervals, accountability of government and effective

Parliament. All necessary steps will be taken for making Parliament effective.

2. Political framework, decentralization of power & people’s participation

Local government will be given due importance with a view to effecting radical

change of the political system. The local government institutions will play a critical role

in development programmes. Self-reliant local self-government institutions will be

established at upazila and zila levels to ensure representative, responsive and functional

governance at the grassroots levels.

3. Good governance through establishing rule of law and avoiding political partisanship

Human rights will be established on a strong footing with a view to ensuring the

rule of law. Independence of the judiciary will be ensured and the institutions of the state

and administration will be freed from partisan influence. The basis of appointments and

promotions will be merit, efficiency, seniority, honesty and loyalty to the Republic;

political connections will have no relevance.

4. Transformation of political culture

Terrorism, corruption and use of religion for politics will be eliminated. Steps

appropriate to the time will be taken to establish democratic principles in the political

parties, transparency of political funding, civility and tolerance.

5. A society free from corruption

The institutions of the State will be made more effective along with an

independent and strong Anti-corruption Commission for curbing corruption. Social

resistance to corruption will be promoted alongside legal steps. All possible steps will be

taken to stop corruption, such as charter of citizens’ rights, right to information,

computerization of official documents, and decentralization of power. Adequate checks

at every level of public spending would be built into the financial management system of

the government.



6. Empowerment and equal rights for women

The Women’s Policy of 1997 will be revived for ensuring equal right and access

for women to the state and social space; laws which discriminate against women will be

amended and 100 seats will be reserved for women for direct election.

7. Economic development & initiative

a) Meeting basic needs: With a view to providing food, clothing, shelter, education and

health care to the citizens in accordance with Article 15 of the Constitution, gross

domestic product will be raised to 8% by 2013 and 10% by 2021 which will be

sustained thereafter.

b) Population and labour force: Population in 2021 is estimated at 165m, and labour

force at 105m. Programmes will be taken up for employment of at least 85% of the

work force.

c) Alleviation of poverty: We aim not at reduction of poverty, but removal of poverty,

through which we shall try to achieve the Millennium Goals declared by UN by 2015,

and by 2017 latest. Beginning in 2021, poverty will be reduced to 15% from 45%

now, progressively. Number of poor people will rise from 45 million now to 65m in

2021, and then fall to 25m in 2021. Sustainable safety nets will be established for the

extreme poor until poverty is removed.

d) Food & nutrition: Food deficiency will be removed and self-reliance in food

production achieved by 2012, which will enable us to meet the nutrition needs of 85%

of the population.

e) Health care: By 2021, a minimum daily intake of 2,122 kilo calories of food,

elimination of contagious disease, primary health care and sanitation for all will be

ensured. Average longevity will be increased to seventy years, and efforts will be

made for the reduction of child and maternal mortality.

f) Education: Enrolment at the primary level will be increased to 100% net by 2010.

Elimination of illiteracy by 2014, improvement in the quality of education, creation of

a generation educated in science and technology, graduation degree level education



made free by 2013 and ensuring higher salary for teachers are the other educational

goals.

g) Industry: A strong foundation for industrialization will be established by 2021.

Contribution of the industrial sector to national GDP will be doubled. Primacy will be

given to agro and labour intensive industries and the highest emphasis will be given to

the information technology sector. The investment policy will be geared to

implementing a strategy for attracting both domestic and foreign investment.

h) Energy security: An energy policy will be adopted tapping all sources of traditional

and non-traditional energy to ensure an accelerated rate of economic development and

industrialization. A three year crash programme will be taken up to meet the existing

crisis. By 2015, electricity production will be increased to 8,000 megawatt. By 2021,

demand for electricity is projected to increase to 20,000 megawatt. We will take all

possible actions aiming at enhancing our generation capacity. To increase gas

production, regular survey of gas resources and work on well development will be

undertaken. To meet energy demand, efforts will be undertaken for regional energy

security through mutual cooperation in addition to exploring internal sources.

i) Infrastructural development: Road, rail, river and air transport and telecommunication

systems will be expanded. Construction of bridges and tunnels for Padma and

Karnaphuli rivers, connecting Bangladesh with the Asian highway and Asian railway,

improvement of port facilities, building of a deep sea port to open up Bangladesh's

ports to countries of Asia will be implemented. In Dhaka, construction of a metro

tunnel, elevated rail and circular rail to remove traffic jams and to solve public

transport problems will be studied forthwith in order to undertake a feasible project.

The project will then be implemented on a priority basis.

j) Housing: By 2015, housing for all will be ensured. In every union and upazila,

‘growth center’ centric village housing and in towns housing with modern amenities

will be implemented.

k) Environment: All measures will be taken to protect Bangladesh, including planned

migration abroad, from the adverse effects of climate change and global warming.



Facing natural calamities, planned reduction of air pollution, prevention of industry

and transport related air pollution and disposal of waste in scientific manner will be

ensured. Steps will be taken to make Bangladesh an ecologically attractive place

through retention of forests and water bodies and prevention of river erosion.

l) Water resources: Bangladesh Awami League will take the initiative to formulate a

comprehensive regional water policy along with India, Nepal and Bhutan for regional

water security. In addition, in keeping with comprehensive water policy, articulated

earlier by Bangladesh Awami League, measures will be taken for development of our

water resources and their rational use.

8. Bangladesh in the global arena

a) Achievements of liberation: Multi-pronged measures will be taken to uphold the

glorious history and the fruits of our national independence and liberation, to

energize the new generation with the spirit of liberation, struggle, patriotism and

love for humanity. Highest priority will be given to the development of an

innovative spirit in the younger generations and opportunity will be provided for

them to participate in nation building activities.

b) Culture: Measures will be taken to remove obstacles in the development of

Bengali culture, literature, art, music and sport and to provide all opportunities by

the state to enable the younger generations to attain international standards and to

contribute to the nation.

c) Foreign policy: In international affairs Bangladesh will follow the policy of

‘friendship towards all and malice towards none’.

(Source: Bangladesh Board of Investment government website)

4.6. Macroeconomic and Economic Scenario

4.6.1 Macroeconomic Situation

The economy of Bangladesh has successfully tackled the contagion effect of global

economic crisis and managed to maintain a sustained growth. According to a provisional

estimate, the economy has posted a growth of 6.66 percent in FY2010-11 against that of 6.07

percent in FY2009-10. This performance is mainly attributable to the sustained growth in

agriculture sector coupled with recovery of growth in industry sector and the satisfactory

performance of service sector. During this period, higher growth in revenue mobilization and



prudent budget management helped maintain macroeconomic stability and discipline in fiscal

front. Furthermore, the increasing global demand for goods and services after recovery has

helped achieving higher growth in foreign trade, while soaring global food and non-food

prices has created inflationary pressure in the country. Alongside adopting various

administrative and structural measures, monetary policy instruments have also been used to

reduce the inflationary pressure. Moreover, slower growth in remittance inflows and higher

import demand due to massive investment in infrastructure sector including the power sector,

the current account balance and exchange rate was under pressure during the last quarter of

FY2010-11. However, this situation did not emerge as a big challenge to the macroeconomic

stability. The foreign exchange reserve remained steady at above US$ 10 billion during this

period. Overseas job replacement and remittance inflows rebounded since January 2011. It is

expected that, improved infrastructure and streamlined power sector would be conducive to

domestic and foreign investment, which will lead the country to the higher growth trajectory.

(Source: Ministry of Finance, Finance Division, Bangladesh government website)

4.6.2 Global Economic Scenario

The world has come out of the recession of 2007-2009 stronger than anticipated.

However, the recovery is marked by different speeds in different regions of the world. The

consolidation of the global recovery continues in two places. In advanced economies, the

recovery has been less than expected coupled with huge fiscal imbalances, mounting public

debt and increased unemployment. In addition, the sovereign debt crisis in the periphery of

euro area has created downside risks in the process of recovery. While the emerging and

developing economies have recouped from the slowdown during global downturn, there has

been inflationary pressure in these economies, and there were some signs of overheating

driven in part by strong capital inflows. Against this backdrop, the World Economic Outlook,

October 2011, showed a downward revision of global output in 2011 and 2012 around half a

percentage point to 4 percent from April 2011 Outlook. After the 3.1 percent rebound in

2010, the output in advanced economies was expected to grow by 1.6 percent and 1.9 percent

in 2011 and 2012 respectively, lower by 0.7 to 0.8 percentage point compared to April 2011

projection. The output growth in emerging and developing economies was expected to grow

by 6.4 percent in 2011 and 6.1 percent in 2012, slightly lower than earlier projection. The

developing Asia’s economies proved their resilience in the face of a tremendous external

shock and are expected to grow in the neighborhood of 8 percent in 2011 and 2012.



Despite global recovery, the inflationary pressure remained subdued in advanced

economies due to low levels of capacity utilization, while inflationary pressure was more

intense in the emerging and developing economies. Again the recent surges in global oil and

food prices were adding further inflationary pressures. Inflation in advanced economies was

1.6 percent in 2010, which was expected to pick up to 2.6 percent in 2011. On the other hand,

inflation in emerging and developing economies was 6.10 percent in 2010, which was

expected to pick up to 7.5 percent in 2011 due to domestic demand and induced foreign

capital inflows alongside the price-hike of commodities like oil and food.

World trade volume of goods and services, which rebounded by a staggering 12.8

percent in 2010, was expected to slip by 7.5 percent in 2011. Exports from the advanced

economies grew by 12.3 percent in 2010, while imports also grew by 11.7 percent, which

were expected to slip by 6.2 percent and 5.9 percent respectively in 2011. Emerging and

developing economies showed relatively higher growth in trade volume of goods and services

in 2010 and achieved 13.6 percent and 14.9 percent growth respectively in 2010. Moreover,

the volume of exports and imports would experience less deceleration in 2011 and is

expected to grow by 9.4 percent and 11.1 percent respectively in 2011.

There are still several substantial downside risks in the global economy. Downside

risks arose from the possibility of tensions of sovereign debt crisis in the peripheral countries

of the euro area spreading to the core of Europe, the continued weakness of the U.S. real

estate market, high commodity prices, the tensions in the Middle East pushing oil prices up,

overheating emerging market economies and rapid rising of inflationary pressure. (Source:

Ministry of Finance, Finance Division, Bangladesh government website)

4.6.3. The Global Economic Recession and Bangladesh

The impact of the global financial crisis on Bangladesh economy was not observed at

the beginning of the crisis. However, some weakening in export and import was observed in

the third quarter of FY2008-09, which continued through the second quarter of FY2009-10.

During these two fiscal years, exports grew by 10.31 percent and 4.11 percent respectively,

while imports grew by 4.06 percent and 5.53 percent respectively. In the context of negative

growth in world trade, these growth rates were satisfactory. With the rebound in global trade,

Bangladesh’s trade sector is growing significantly. The exports and imports registered a

growth over 40 percent in the last fiscal year. The Government provided two incentive



packages that included policy support and cash incentives for export sector which helped

quick turnaround from the recessionary shocks. The slowdown in the growth of remittance

reflected the impact of global recession, particularly on the real estate markets in the Middle

East, and on industrial labour demand in some South East Asian economies such as Malaysia.

However, remittance performance was at satisfactory level registering a growth rate of 22.42

percent in FY2008-09 and 13.40 percent in FY2009- 10. This growth further decelerated in

FY2010-11 to 6.03 percent. It is however to be noted that both remittance and overseas job

replacement rebounded since January 2011. (Source: Ministry of Finance, Finance Division,

Bangladesh government website)

4.6.4. Economic Growth

The economy had experienced modest fall of GDP growth during the recessionary

period. Despite continuous growth in agriculture sector, the sluggish growth in industry

sector particularly in the manufacturing sector compared to pre-recession period was

responsible for slower GDP growth. The global economic downturn during 2007-2009 had

some degree of negative impact on Bangladesh economy. The economy had experienced

modest fall of GDP growth during the period. The GDP grew at a rate of 6.19 percent in

FY2007-08 and 5.74 percent in FY2008-09. In the wake of global recovery, the economy of

Bangladesh rebounded and recorded 6.07 percent growth in FY2009-10. According to the

provisional estimate of Bangladesh Bureau of Statistics (BBS), GDP has posted a growth rate

of 6.66 percent in FY2010-11. The GDP growth, according to the Medium Term

Macroeconomic Framework (MTMF) projection will stand at 7 percent in FY2011-12, which

is projected to reach 8 percent in FY2014-15.

This performance is mainly attributable to the sustained growth in agriculture sector

coupled with recovery of growth in industry sector and the satisfactory performance of

service sector. Agriculture recorded sustained growth for the last three consecutive fiscal

years responding to favourable weather conditions, continued government support for

agriculture inputs and greater access to credit. Industry sector rebounded from the sluggish

growth during recession and recorded a robust growth of 8.16 percent, up from 6.49 percent

of previous year. Massive initiatives taken by the government in the overall infrastructure

sectors including the power helped to improve industrial production. Service sector has

maintained satisfactory growth path and recorded 6.63 percent growth, slightly higher than

the growth of previous year (6.47 percent). In FY2010-11, per capita GNI and per capita



GDP stood at US$ 818 and US$ 755 respectively, up from US$ 751 and US$ 687

respectively a year earlier. (Source: Ministry of Finance, Finance Division, Bangladesh

government website)

4.6.5. Gross Domestic Product (GDP) at Current Prices

The value of GDP at current market prices reached at TK. 7, 87,495 crore in

FY2010-11, which was 13.42 percent higher than the GDP of previous year (Tk.6, 94,324

crore). In FY 2010-11, the per capita GDP was estimated at TK. 53,236 which was 11.99

percent higher than the per capita GDP of Tk. 47,536 a year earlier. On the other hand, per

capita national income stood at Tk. 57,652 in FY2010-11, which was Tk. 51,959 in the

previous fiscal year. In dollar terms, per capita GNI and per capita GDP stood at US$ 818

and US$ 755 respectively, which was US$ 751 and US$ 687 respectively a year earlier.

Table 9 represents GDP, GNI, per capita GDP and national income and table 10 represents

the sectoral GDP at current market prices over the last couple of years. (Source: Ministry of

Finance, Finance Division, Bangladesh government website)

Table 9: GDP, GNI, Per Capita GDP and GNI at Current Market Prices

Item 2005-

06

2006-

07

2007-

08

2008-

09

2009-

10

2010-

11*

GDP (In Crore Tk.) 415728 472477 545822 614795 694324 787495

GNI (In Crore Tk.) 442935 507752 594212 670696 758928 852822

Population (In Crore) 13.88 14.06 14.24 14.42 14.61 14.79

Per Capita GDP (In

Tk.)

29955 33607 38330 42628 47536 53236

Per Capita GNI (In Tk.) 31915 36116 41728 46504 51959 57652

Per Capita GDP (In

US$)

447 487 559 620 687 755

Per Capita GNI (In

US$)

476 523 608 676 751 818

Source: Bangladesh Bureau of Statistics (BBS) * Provisional



Table 10: Gross Domestic Product (GDP) at Current Market Prices

(In Crore Taka)

Sector/Sub-sector 2005-

06

2006-

07

2007-

08

2008-

09

2009-

10

2010-

11*

1. Agriculture and

Forestry

a. Crops & horticulture

b. Animal farming

c. Forest and related

services

62223

46118

9682

6423

70124

52468

10780

6876

80201

60578

12118

7505

89426

67247

14002

8177

100588

75339

16219

9030

113388

85023

18364

10001

2. Fishing 16317 17783 19790 21806 24223 26993

3. Mining and

Quarrying

a. Natural gas & crude

petroleum

b. Other mineral

resources

4643

2568

2075

5322

2845

2476

6152

3164

2988

7091

3590

3501

8114

4039

4075

9021

4220

4801

4. Manufacturing

a. Large & medium

scale

b. Small scale

68923

48974

19949

81178

57688

23490

93901

66759

27142

106445

75610

30835

120108

84899

35209

138430

98836

39594

5. Electricity, Gas &

Water Supply

a. Electricity

b. Gas

c. Water

5392

4455

594

342

5590

4567

651

372

6070

4955

716

399

6542

5311

793

438

7195

5840

876

479

7712

6273

909

530

6. Construction 32797 37543 43854 50125 55658 62325

7. Wholesale and

Retail Trade

56984 66011 78220 88276 100295 113902

8. Hotel and

Restaurants

2853 3289 3889 4460 5150 5971



9. Transport, Storage

& Communication

a. Land transport

b. Water transport

c. Air transport

d. Support transport

services, storage

e. Post &

telecommunication

43206

32841

3137

500

1260

5467

48908

36853

3307

509

1420

6820

56907

42857

3621

546

1569

8314

64280

48365

3923

589

1758

9645

71880

54159

4214

649

1938

10920

84022

63803

4576

705

2033

12906

10. Financial

Intermediations

a. Monetary

intermediation(Bank)

b. Insurance

c. Other financial

intermediation

6684

4995

1430

260

7744

5797

1640

307

8955

6656

1930

368

10245

7613

2201

431

12300

9063

2702

535

14458

10600

3222

637

11. Real Estate,

Renting & other

Business Activities

32157 34929 38058 41616 45683 49888

12. Public

Administration and

Defence

11036 12743 14427 16360 18757 21977

13. Education 9935 11776 13531 15494 17908 20964

14. Health and Social

Work

9022 10307 11819 13391 15142 17549

15. Community,

Social and Personal

Services

38283 43568 50200 58364 68466 75061

Import Duty 15274 15662 11733 20871 22853 25835

GDP at Current

Market Price

415728 472477 545822 614795 694324 787495

Growth Rate (%) 12.14 13.65 15.52 12.64 12.94 13.42




4.6.6. Fiscal Situation

Fiscal performance was stable in FY2010-11 with a satisfactory rise in revenue

receipts accompanied by a substantial rise in overall expenditure. According to provisional

estimate, total revenue receipts in FY2010-11 increased by 22.25 percent over the previous

year outturn. Total revenue receipts as percent to GDP reached 11.78 percent in FY2010-11,

up by 0.85 percentage point of GDP compared to the preceding year’s revenue earnings.

Tax revenues from NBR sources increased by 27.48 percent to Tk. 79,092.20 crore in

FY2010-11 from Tk. 62,042.16 crore in FY2009-10. This growth was mainly driven by the

growth in customs duties (28.44 percent), VAT at import level (16.19 percent) and VAT at

local level (28.99 percent) and income tax (33.25 percent). Non-NBR sources of tax revenue

increased by 17.77 percent to Tk. 3,230 crore in FY2010-11 compared to 3.38 percent growth

in FY2009-10. Non-tax revenues decreased by 1.33 percent to Tk. 13,242 crore from Tk.13,

420 crore in FY2009-10.

Likewise, total public expenditure increased by 22.36 percent over the previous year

outturn. As percent of GDP, public expenditure reached 15.79 percent in FY2010-11, up by

1.15 percent of GDP compared to that of the previous year. According to provisional data, the

total expenditure under non-development budget increased by 20.09 percent to Tk.91, 330

crore in FY2010-11 from Tk.70, 522 crore in FY2009-10. Moreover, Annual Development

Programme (ADP) expenditure increased by 26.67 percent against 31.79 percent increase in

FY2009-10.

Finally, as per provisional estimate, the budget deficit stood at 4.00 percent of GDP,

of which 3.43 percent was financed from domestic sources and the remaining 0.57 percent

from external sources. (Source: Ministry of Finance, Finance Division, Bangladesh

government website)

4.6.7. Capital Markets

The capital markets became volatile from the second half of FY2010-11. During the

period, the DSE general index increased by 98.43 percent from 3,010.26 to 6,153.68

indicating keen interests showed by the investors in the capital market. By the end of June

2010, the number of BO (Beneficiary Owner) accounts has increased to 25.64 lakh from



14.15 lakh at the end of June 2009. At the beginning of FY2010-11, the capital market

showed buoyant. The DSE general index stood at 8,290.41 in December 2010, up by 34.72

percent compared to that of June 2010. Similarly, market capitalization stood at 44.1 percent

of GDP at that time. However, the overheated capital markets collapsed in January 2011 and

were in process of recovery and stabilization during the last quarter of FY2010-11. Market

capitalization and general index of DSE stood at 36.24 percent of GDP and 5,093.19 at the

end of FY2010-11. Following this, the Government commissioned comprehensive

investigation by a committee into the causes behind over blowing of prices of stocks in the

market leading to eventual collapse of price bubble, with a view to bringing about necessary

reforms in regulatory authority and market structure based on findings of the investigation.

As per the recommendations of the committee, the Securities and Exchange Commission

(SEC) has been restructured to make it capable of establishing control over the stock markets

and to regain investors’ confidence. In order to separate the ownership, management and

trading of stock exchange, the process of demutualization in Dhaka and Chittagong Stock

Exchanges has begun. To regain investors’ confidence in the capital market by providing

adequate liquidity, a Tk. 5,000 crore open-end mutual fund known as Bangladesh Fund, has

been established. In addition, there was an initiative to frame Financial Reporting Act to

maintain stability in capital market. Side by side, the Government has been considering a plan

to establish a Financial Reporting Council to oversee the audit and accounting standards and

their transparency. (Source: Ministry of Finance, Finance Division, Bangladesh government

website)

4.6.8. GDP, Saving and Investment

The global economic downturn during 2007-2009 had some degree of negative

impact on Bangladesh economy. The economy had experienced modest fall of GDP growth

during the period. However in the wake of global recovery the economy rebounded and has

posted a growth of 6.66 in FY2010-11 as compared to 6.07 percent and 5.74 percent growth

in FY2009-10 and FY2008-09 respectively. This performance is mainly attributable to the

sustained growth in agriculture sector coupled with recovery of growth in industry sector and

the satisfactory performance of service sector. Agriculture recorded sustained growth for the

last three consecutive fiscal years responding to favourable weather conditions, continued

government support for agriculture inputs and greater access to credit. Industry sector

rebounded from the sluggish growth during recession and recorded a growth of 8.16 percent,

up from 6.49 percent of previous year. Service sector has maintained satisfactory growth path



and recorded 6.63 percent growth, slightly higher than the growth of previous year (6.47

percent). In FY2010-11, the contribution of three broad sectors namely - agriculture, industry

and service accounted for 19.95 percent, 30.33 percent and 49.72 percent respectively. The

relative share of these three sectors was 20.29 percent, 29.93 percent and 49.78 percent

respectively a year earlier. On expenditure side, consumption expenditure increased by 0.51

percentage point of GDP to 80.41 percent of GDP in FY2010-11 compared to a year earlier.

However, domestic savings decelerated from 20.10 percent of GDP in FY2009-10 to 19.59

percent of GDP in FY2010-11 mainly for increasing consumption expenditure. While due to

slower growth in remittance inflow, national savings decelerated from 30.02 percent of GDP

in FY2009-10 to 28.40 percent of GDP in FY2010-11. Moreover, due to improvement in

power and higher expending in Annual Development Programme, investment-GDP ratio

stood to 24.73 percent of GDP in FY2010-11, up from 24.41 percent of GDP a year earlier.


4.7. External Sector

4.7.1. Export

With the recovery of global economy from recession, Bangladesh’s export trade has

been performing better. Export recorded a robust growth of 41.47 percent in FY2010-11, as

against 4.11 percent during the previous fiscal year. Such growth was contributed mainly by

the growth of export of raw jute (82.14 percent), knitwear (46.26 percent), agriculture

products (42.39 percent), frozen food (40.45 percent), jute goods (40.37 percent), woven

garments (40.23 percent) and leather (31.86 percent). The Government continued the

incentives provided by the two stimulus packages declared earlier for supporting export

sector. With the aim of promoting export diversification, additional incentives have been

provided to the exporters under ‘The New Markets Exploration Assistance Programme’. In

the mean time, Japan, Korea, South Africa and Turkey have emerged as a new destination of

Bangladeshi apparels. Besides, incentive has also been provided to the ship building industry,

as a potential sector. Furthermore, the relaxation of the Rules of Origin by EU since January,

2011 has created opportunities for further expansion of RMG exports in the EU region.




4.7.2. Import

In FY2010-11, imports picked up and grew by 41.79 percent, as against 5.53 percent

during the previous fiscal year as the global economy started to recover and international

commodity price increased. In addition, higher-than-expected import of food grains, imports

of machinery for newly established power plants and demand for petroleum for running the

plants contributed to the sharp rise in import. Based on the settlement of Letters of Credit

(LCs) in FY2010-11, import payments of food grains stood a record high at US $1993.60

million during FY2010-11, up by 133.3 percent as compared to US $854.51 million in the

previous year. The import of industrial raw materials increased by 46.63 percent, while that

of capital machinery and machinery for miscellaneous industries increased by 40.21 percent

and 36.19 percent respectively during the period. The import of petroleum and petroleum

products rose by 38.73 percent during the period. (Source: Ministry of Finance, Finance

Division, Bangladesh government website)

4.7.3. Balance of Payments

Trade balance recorded a deficit of US$ 7,328 million in FY2010-11 as compared to

the deficit of US$ 5,155 million in FY2009-10. It should be mentioned here that the

Government has taken a range of steps to boost up investment in infrastructure sector

including the power sector. Consequent upon the import of machinery for new power plants

and oil price hike coupled with increased import of oil for power plants, the current account

surplus was under pressure. The service account also experienced higher deficit (US$ 2398

million) as a consequence of increased cost of transportation, particularly freight, and travel

payments. The income account also recorded deficit (US$1354 million) on account of

payments in the form of profits and dividend repatriation. Weak remittance inflows (6.06

percent growth) and widening gap of service (net) has been putting downward pressure on the

current account balance. However, the current account recorded a surplus of US$ 995 million

(0.9 percent of GDP) in FY2010-11. The deficit in the capital and financial accounts

(US$984 million) was attributable to the decrease in foreign direct investments, medium and

long term loan, and trade credits. However, the overall balance of payment (BoP) was in the

negative territory in FY2010-11 after a long period. The deficit recorded in the overall

balance of payment stood at US$ 635 million during FY2010-11 as compared to surplus

balance of US$ 2865 million in the previous year. (Source: Ministry of Finance, Finance




4.7.4. Foreign Exchange Reserve

Due to decline in current account surplus and the deficit in the capital and financial

accounts, there was a deficit in the overall balance. The gross official foreign exchange

reserves was almost pleatued over the period and stood at US$ 10,912.00 million as on June

30, 2011, which was 1.51 percent higher than the amount as on June 30, 2010. As on June 30,

2011, the reserve was equivalent to the import payments for about 3.89 months. (Source:


4.8. Sector wise Growth of GDP

The estimation of production based GDP comprises 15 sectors. Some sectors are

further divided into various sub sectors. All the 15 sectors are grouped into three broad

sectors wise agriculture, industry and service. The broad agriculture sector includes two

sectors namely, (i) agriculture and forestry and (ii) fishing. The broad industry sector

comprises (i) mining and quarrying, (ii) manufacturing, (iii) electricity, gas and water supply

and (iv)construction sector. The broad service sector consists of the collective outputs of the,

(i) wholesale and retail trade, (ii) hotels and restaurants, (iii) transport, storage and

communication, (iv) financial intermediations, (v) real estate renting and business activities,

(vi) public administration and defence, (vii) education, (viii) health and social work and (ix)

community, social and personal services. Table 11 and figure 7 show the sectoral growth

rates of GDP at constant prices since FY 2005-06. (Source: Ministry of Finance, Finance


Table 11: Sectoral Growth Rate of GDP at Constant Prices (Base Year: 1995-96)

(In Percentage)


06

2006-

07

2007-

08

2008-

09

2009-

10

2010-

11*

1. Agriculture and Forestry


5.23

5.03

4.69

4.43

2.93

2.67

4.10

4.02

5.56

6.13

4.82

5.04



b. Animal farming

c. Forest and related services

6.15

5.18

5.49

5.24

2.44

5.47

3.48

5.69

3.38

5.23

3.54

5.35

2. Fishing 3.91 4.07 4.18 4.16 4.15 5.44

3. Mining and Quarrying


petroleum

b. Other mineral resources

9.26

9.52

8.84

8.33

8.03

8.80

8.94

8.26

10.01

9.84

9.15

10.90

8.80

8.12

9.84

4.85

1.04

10.56

4. Manufacturing

a. Large & medium scale

b. Small scale

10.77

11.41

9.21

9.72

9.74

9.69

7.21

7.26

7.10

6.68

6.58

6.90

6.50

5.98

7.77

9.51

10.41

7.34

5. Electricity, Gas & Water

Supply

a. Electricity

b. Gas

c. Water

7.67

7.45

9.37

7.55

2.10

1.08

7.37

7.08

6.77

6.68

7.72

6.00

5.91

5.39

8.42

8.39

7.28

7.21

7.51

7.77

5.96

6.50

0.96

9.03

6. Construction 8.31 7.01 5.68 5.70 6.01 6.37

7. Wholesale and Retail Trade 6.75 8.04 6.82 6.21 5.87 6.06

8. Hotel and Restaurants 7.45 7.52 7.55 7.58 7.61 7.62

9. Transport, Storage &

Communication

a. Land transport

b. Water transport

c. Air transport

d. Support transport services,

storage

e. Post & telecommunication

7.98

4.14

1.95

5.25

6.13

26.70

8.03

4.18

1.73

2.01

8.93

23.29

8.55

4.54

2.54

6.20

8.45

21.64

8.01

5.17

2.46

7.38

9.64

16.11

7.69

5.98

1.01

9.13

8.15

12.95

7.93

4.03

1.94

7.61

2.50

17.63

10. Financial Intermediations

a. Monetary


b. Insurance

c. Other financial intermediation

8.50

8.19

9.16

10.94

9.18

9.34

8.21

11.62

8.89

8.38

10.03

12.47

8.99

9.05

8.38

11.13

11.64

10.47

14.88

16.10

9.42

8.82

11.14

10.76

11. Real Estate, Renting &

other

3.69 3.76 3.75 3.81 3.89 3.96



Business Activities

12. Public Admn and Defence

13. Education

14. Health and Social Work

15. Community, Social and

Personal Services

Growth Rate (%)


Figure 7: Sectoral GDP Growth at Constant

Source: Bangladesh Bureau of Statistics

4.8.1. Agriculture Sector

The growth rate of the agriculture sector in FY 2010

at 4.82 percent, which was 5.56 percent in FY2009

the crops and horticulture sub-

in FY2010-11 compared to the growth of the previous fiscal year. This growth was mainly

attributed to increased Aus, Aman, Boro

Aman, Boro and wheat) production was provisionally estimated at 347.96 lakh metric tonnes

in FY2010-11, which was 332.26 lakh metric tonnes a year earlier. Production of potato has

increased from 81.68 lakh metric tonnes in FY2009

FY2010-11, according to the provisional estimates. Jute production has also increased

significantly from 50.90 lakh bales in FY2009



12. Public Admn and Defence 8.15 8.41 6.21 7.01 8.35

9.05 8.96 7.80 8.05 9.24

14. Health and Social Work 7.79 7.64 7.02 7.20 8.10

15. Community, Social and 4.09 4.58 4.62 4.70 4.72

6.63 6.43 6.19 5.74 6.07

Bangladesh Bureau of Statistics (BBS) * Provisional

: Sectoral GDP Growth at Constant Prices

Source: Bangladesh Bureau of Statistics

The growth rate of the agriculture sector in FY 2010-11 was provisionally estimated

at 4.82 percent, which was 5.56 percent in FY2009-10. According to the provisional estimate,

-sector of the agriculture sector is likely to grow by 5.04 percent

11 compared to the growth of the previous fiscal year. This growth was mainly

Aus, Aman, Boro, Potato and Jute production. Total

and wheat) production was provisionally estimated at 347.96 lakh metric tonnes

11, which was 332.26 lakh metric tonnes a year earlier. Production of potato has

increased from 81.68 lakh metric tonnes in FY2009-10 to 83.26 lakh metric tonnes in

11, according to the provisional estimates. Jute production has also increased

significantly from 50.90 lakh bales in FY2009-10 to 83.96 lakh bales in FY2010



8.35 9.56

9.24 9.47

8.10 8.30

4.72 4.75

6.07 6.66

11 was provisionally estimated

10. According to the provisional estimate,

sector of the agriculture sector is likely to grow by 5.04 percent

11 compared to the growth of the previous fiscal year. This growth was mainly

, Potato and Jute production. Total cereals (Aus,

and wheat) production was provisionally estimated at 347.96 lakh metric tonnes

11, which was 332.26 lakh metric tonnes a year earlier. Production of potato has

lakh metric tonnes in

11, according to the provisional estimates. Jute production has also increased

10 to 83.96 lakh bales in FY2010-11. The



production of minor crops, which include pulses, spices, sugarcane, fruits, vegetables and

tobacco, was expected to significant growth that of the preceding year’s levels. These minor

crops contributed about 30 percent of the total output of the crop sub-sector.

Among the non-crop agriculture sub-sectors, animal farming sub-sector was estimated

to grow by 3.54 percent in FY2010-11 which was 3.38 percent in the previous fiscal year. In

addition, the expected growth rate of the forestry sub-sector was 5.35 percent in FY 2010-11

compared to 5.23 percent in the FY 2009-10.

Total inland and marine catches in FY 2010-11 as estimated by the Directorate of

Fisheries (DOF) was 3.00 million metric tonnes which was 6.61 percent higher than that of

the previous fiscal year. The fishing sector was likely to grow by 4.44 percent in FY 2010-11

compared to the growth of 4.15 percent in FY 2009-10. (Source: Ministry of Finance,

Finance Division, Bangladesh government website)

4.8.2. Industry sector

The broad industry sector was estimated to grow by 8.16 percent in FY2010-11

compared to the growth of 6.49 percent in FY2009-10. Within the broad industry sector,

mining and quarrying sector was projected to grow at the rate of 4.85 percent in FY2010-11,

which grew at 8.80 percent in FY2009-10.

Among these sub-sectors, natural gas and crude petroleum and other mining sub-

sectors would grow by 1.04 percent and 10.56 percent respectively in FY 2010-11 compared

to the growth rates of 8.12 percent and 9.84 percent in the previous fiscal year.

According to the Quantum Index of Industrial Production (QIP) of Bangladesh

Bureau of Statistics, the growth rate of the production of large and medium scale

manufacturing industries was 10.69 percent in FY 2010-11. Production in these sectors,

especially those relating to food items, industrial chemicals, other chemical products,

petroleum refinery, other non-metallic mineral products and iron and steel industry showed

moderate growth in the first six months of FY2010-11. Ready-made garments and knitwear

showed remarkable growth in FY2010-11. Performance of other industries registered

insignificant growth except sugar, carpet and rugs, paper and paper products, electrical

machinery etc. which show a downward growth. Small and cottage industries showed a

decreasing trend in production during the first half of FY2010-11 compared to the level of

production of the same period of the previous fiscal year. It was expected that the small scale



industries would achieve 7.34 percent growth in FY 2010-11 compared to 7.77 percent

growth in FY 2009-10. The overall growth rate of manufacturing sector was estimated to be

9.51 percent in FY 2010-11.

The overall growth rate of the power, gas and water supply sector is likely to be 5.96

percent in FY 2010-11 as compared to 7.28 percent in FY 2009-10. The growth rate of this

sector declined due to decreased production of natural gas. The overall construction sector

was expected to achieve higher growth due to increased construction activities including

public sector construction. The construction sector was estimated to grow by 6.37 percent

during FY2010-11 against 6.01 percent growth in FY 2009-10. (Source: Ministry of Finance,


4.8.3. Service Sector

The growth in service sector during FY2010-11 was broad-based and almost all the

sectors within the broad service sector were estimated to grow moderately compared to the

growth of the previous fiscal year. Higher growth in agriculture and industry and expansion

of trade related activities helped maintain satisfactory growth in this sector. Among the

sectors, the output of the wholesale and retail trade was expected to grow at 6.06 percent in

FY2010-11 compared to 5.87 percent growth in the previous fiscal year. This happened due

to increased industrial production and imported commodities during the fiscal year. The

transport, storage and communication sector was expected to achieve a growth rate of 7.93

percent in FY 2010-11 while the growth rate of this sector was 7.69 percent in FY 2009-10.

Post and telecommunication sub-sector are at the forefront with a growth of 17.63 percent in

FY 2010-11. The growth rate in the real estate, ranting and business activities sector was

provisionally estimated at 3.96 percent in FY 2010-11 compared to 3.89 percent growth in

FY 2009-10. Among the other services sectors, the growth rate of public administration and

defense, education, and health and social services were expected to grow at the rate of 9.56

percent, 9.47 percent and 8.30 percent respectively in FY 2010-11. Furthermore, in FY 2010-

11, community, social and personal service sector was estimated to grow by 4.75 percent,

slightly higher than the growth rate of the previous fiscal year. (Source: Ministry of Finance,




4.8.4. Sectoral Shares in GDP at Constant Prices

The sectoral share in GDP at constant prices (Base Year: 1995-96) is presented in

Table 12. The table shows that in the FY 2010-11, the share of the agriculture and forestry

sector in GDP at constant price was 15.52 percent which was 15.81 percent in FY2009-10.

The contribution of all the sub-sectors of agriculture and forestry sector decreased during

FY2010-11. Similarly the contribution of fishing sector went down from 4.49 percent in FY

2009-10 to 4.43 percent in FY2010-11. The overall contribution of broad agriculture sector

dipped from 20.29 percent in FY2009-10 to 19.95 percent in FY2010-11. (Source: Ministry

of Finance, Finance Division, Bangladesh government website)

Table 12: Sectoral Shares in GDP at Constant Prices

(In percentage)


06

2006-

07

2007-

08

2008-

09

2009-

10

2010-

11*

1. Agriculture and Forestry


b. Animal farming

c. Forest and related services

16.98

12.28

2.92

1.79

16.64

12.00

2.88

1.76

16.18

11.64

2.79

1.75

15.91

11.43

2.73

1.75

15.81

11.42

2.65

1.73

15.52

11.24

2.57

1.71

2. Fishing 4.86 4.73 4.65 4.58 4.49 4.43

3. Mining and Quarrying


petroleum

b. Other mineral resources

1.16

0.71

0.45

1.18

0.72

0.46

1.21

0.74

0.47

1.25

0.76

0.50

1.29

0.77

0.51

1.26

0.73

0.53

4. Manufacturing

a. Large & medium scale

b. Small scale

17.08

12.14

4.94

17.55

12.47

5.08

17.77

12.63

5.14

17.90

12.71

5.18

17.94

12.68

5.26

18.41

13.12

5.29

5. Electricity, Gas & Water

Supply

a. Electricity

b. Gas

c. Water

1.65

1.38

0.19

0.08

1.57

1.30

0.19

0.09

1.59

1.31

0.19

0.09

1.59

1.31

0.19

0.09

1.60

1.32

0.20

0.09

1.59

1.31

0.19

0.09

6. Construction 9.14 9.15 9.13 9.12 9.10 9.07

7. Wholesale and Retail 14.08 14.24 14.37 14.41 14.36 14.27



Trade

8. Hotel and Restaurants 0.69 0.69 0.70 0.71 0.72 0.73

9. Transport, Storage &

Communication

a. Land transport

b. Water transport

c. Air transport

d. Support transport services,

storage

e. Post & telecommunication

10.07

6.67

0.89

0.12

0.31

2.08

10.18

6.50

0.85

0.11

0.32

2.40

10.44

6.42

0.82

0.11

0.33

2.76

10.65

6.38

0.79

0.12

0.34

3.02

10.79

6.36

0.75

0.12

0.35

3.21

10.91

6.20

0.72

0.12

0.33

3.54

10. Financial Intermediations

a. Monetary


b. Insurance

c. Other financial

intermediation

1.72

1.28

0.37

0.07

1.76

1.31

0.37

0.07

1.81

1.34

0.39

0.07

1.86

1.38

0.40

0.08

1.95

1.44

0.43

0.08

2.00

1.47

0.45

0.09

11. Real Estate, Renting &

other Business Activities

7.87 7.64 7.49 7.34 7.18 6.99

12. Public Admn. and

Defence

2.71 2.75 2.76 2.78 2.84 2.92

13. Education 2.49 2.54 2.58 2.64 2.71 2.78

14. Health and Social Work 2.27 2.29 2.31 2.34 2.38 2.41

15. Community, Social and

Personal Services

7.25 7.09 7.01 6.93 6.83 6.70

GDP 100 100 100 100 100 100

Source: Bangladesh Bureau of Statistics, * Provisional

The share of mining and quarrying sector decreased from 1.29 percent of GDP in

FY2009-10 to 1.26 percent in FY2010-11. However, the share of manufacturing sector

expanded to 18.41 percent of GDP in FY2010-11 compared to 17.94 percent of the previous

fiscal year. The share of power, gas and water supply and construction sector decreased

slightly in FY2010-11 compared to the share recorded a year earlier. Moreover, in FY2010-



11, the share of broad industry sector reached 30.33 percent, from 29.93 percent of the

previous fiscal year.

In the service sector, the contribution of wholesale and retail trade sub-sector was the

highest (14.27 percent) in FY2010-11. The contribution of the sub-sector was 14.36 percent

in FY2009-10. The second largest share within the sector was the transport, storage and

communication sub- sector. The contribution of this sub-sector reached 10.91 percent in FY

2010-11, which was 10.79 percent in FY2009-10. The third largest share came from real

estate, renting and business activities (6.99 percent of GDP), followed by community, social

and personal services (6.70 percent of GDP) sub-sector in FY2010-11. Finally, the share of

the broad service sector in GDP was 49.72 in FY 2010-11 which was 49.78 percent in FY

2009-10. (Source: Ministry of Finance, Finance Division, Bangladesh government website)

Table 13 and graph show the structural changes over the last three decades. It is

evident that, the share of the industry sector in GDP increased gradually and continued to

increase in the current fiscal year. While, the contribution of the service sector over the

period remained almost same.

Table 13: Trend of Structural Transformation of Broad Sectoral Shares in GDP and

Growth Rate at Constant Prices (Base year: 1995-96)

Share (in percent)

Sector 1980-

81

1985-

86

1990-

91

1995-

96

2000-

01

2005-

06

2009-

10

2010-

11*

Agriculture 33.07 31.15 29.23 25.68 25.03 21.84 20.29 19.95

Industry 17.31 19.13 21.04 24.87 26.20 29.03 29.93 30.33



Service 49.62 49.73

Total 100 100

Average growth rate (in percent)

Agriculture 3.31 3.31

Industry 5.13 6.72

Service 3.55 4.10

GDP (At

producer

prices)

3.74 3.34


Figure 8: Trend in Sectoral Contribution of GDP over Three Decades

Source: Source: Bangladesh Bureau of Statistics (BBS) * Provisional

4.8. 5. Expenditure Based GDP

Table 14 and Table

investment situation respectively. On the expenditure side, the economy remains dominated

by consumption, accounting for 80.41 percent of GDP. The rise in consumption was driven

by good agriculture output and remittance induced domestic demand, and well

budgetary stimulus including higher social safety net spending. In FY2005

savings and national savings were 20.25 percent and 27.67 percent respectively. In FY2009



49.73 49.73 49.45 48.77 49.14 49.78

100 100 100 100 100 100

Average growth rate (in percent)

3.31 2.23 3.10 3.14 4.94 5.24

6.72 4.57 6.98 7.45 9.74 6.49

4.10 3.28 3.96 5.53 6.40 6.47

3.34 3.24 4.47 5.41 7.02 6.22


: Trend in Sectoral Contribution of GDP over Three Decades

Bangladesh Bureau of Statistics (BBS) * Provisional

4.8. 5. Expenditure Based GDP

and Table 15 show the GDP based on expenditure and the saving and


nsumption, accounting for 80.41 percent of GDP. The rise in consumption was driven

by good agriculture output and remittance induced domestic demand, and well

budgetary stimulus including higher social safety net spending. In FY2005

savings and national savings were 20.25 percent and 27.67 percent respectively. In FY2009



49.78 49.72

100

5.24 4.96

6.49 8.16

6.47 6.63

6.22 6.75

show the GDP based on expenditure and the saving and


nsumption, accounting for 80.41 percent of GDP. The rise in consumption was driven

by good agriculture output and remittance induced domestic demand, and well-supported

budgetary stimulus including higher social safety net spending. In FY2005-06, domestic

savings and national savings were 20.25 percent and 27.67 percent respectively. In FY2009-



10, domestic savings and national savings reached 21.10 percent and 30.02 percent of GDP.

However, in FY2010-11, both the savings decelerated to 19.59 percent and 28.80 percent of

GDP as per the provisional estimate of BBS. Due to increase in consumption expenditure, the

domestic savings decreased, while slower growth in remittance inflow lowered the national

savings. (Source: Ministry of Finance, Finance Division, Bangladesh government website)

Table 14: Expenditure Based Gross Domestic Product at Current Prices

(In Crore Tk.)

Item 2005-06 2006-

07

2007-

08

2008-09 2009-

10

2010-

11*

1. Domestic

Demand [(2)+(3)]

434014 491908 567104 6411311 724282 828002

2. Consumption 331552 376317 434971 491291 554771 633215

Public 23032 26106 28831 32354 37272 43111

Private 308520 350212 406140 458939 517499 590104

3. Investment 102480 115590 132132 149839 169511 194786

Public 24933 25729 27042 28898 34820 41579

Private 77546 89862 105090 120942 134691 153208

4. Net Export -26070 -32723 -45914 -43803 -45895 -66977

5. Gross Domestic

Expenditure

407962 459185 521190 597328 678386 761025

6. Gross Domestic

Product

415728 472477 54583 614795 694324 787495

7. Statistical

Discrepancy

7766 13292 24638 17467 15938 26470

Source: Bangladesh Bureau of Statistics * Provisional

In FY2010-11, both private and public investment increased mainly driven by

massive investment in infrastructure including power and better implementation of Annual

Development Programme. Gross investment accelerated to 24.73 percent of GDP from 24.41

percent in the previous fiscal year. Of which private investment accounted for 19.46 percent

of GDP, up from 19.40 percent, while public investment accounted for 5.28 percent of GDP,

up from 5.01 percent in the previous fiscal year.



Table 15: Savings and Investment (As percent of GDP)

Item 2005-

06

2006-07 2007-08 2008-09 2009-

10

2010-

11*

1. Domestic Savings 20.25 20.35 20.31 20.09 20.10 19.59

Public 1.41 1.41 1.35 1.32 1.35 1.33

Private 18.84 18.94 18.96 18.77 18.75 18.26

2. Investment 24.65 24.46 24.21 24.37 24.41 24.73

Public 6.00 5.45 4.95 4.70 5.01 5.28

Private 18.65 19.02 19.25 19.67 19.40 19.46

3. National Savings 27.67 28.66 30.21 29.57 30.02 28.40

Source: Bangladesh Bureau of Statistics * Provisional

The target for real GDP growth has been set at 7 percent in FY2011-12. The

Government has attached top priority to overcome the situation arising from power shortages

and to increase investment. The private sector has been involved for the successful

implementation of government’s efforts to develop infrastructure including power. As part of

the process of strengthening the Public Private Partnership (PPP) initiatives, a Policy and

Strategy for Public-Private Partnership has been formulated besides establishing a PPP office.

Bangladesh Infrastructure Investment Fund (BIIF), which was created for attracting

investment from local and foreign investors, has been transformed into a company which will

start its operation during FY2011-12. Besides, the Government has taken an initiative to

create Special Economic Zones for triggering the development of backward regions as well

as the growth of industry and agriculture in the industrially potential areas. Meanwhile, a law

titled ‘Bangladesh Economic Zone Act, 2010 has been enacted. It is expected that these

initiatives will boost up investment needed to move to the higher growth trajectory. (Source:


4.9. Rules of Business

As per the allocation of business, the MOFA performs the following functions:

Execution of the policy decisions of the Government;

Maintenance of political/diplomatic relations and dealings with other countries;

Coordination with the international organizations and world bodies;



Arrangement of agreements and treaties including boundary and territorial treaties

with other countries and international organizations and treatment, custody and

preservation of state documents connected therewith;

Diplomatic and consular representations abroad;

Facilitation of making peace with other countries;

Synchronization of matters related with foreign and extra-territorial jurisdictions;

Harmonization of activities of Bangladesh Missions abroad with the activities of

different Ministries/Divisions;

Organization of visits and execution of protocol and ceremonial matters connected

with the foreign, diplomatic and consular representatives and other protocol matters;

Arrangement of tours of the President in foreign countries;

Execution of policy regarding extradition to and from other countries and repatriation

of Bangladesh nations from abroad;

Arrangement of security and management of operation of cipher traffic;

Acceptance of foreign title, honor, award or decoration of Bangladesh nations;

Promotion of cultural, economic, technical, trade and commerce, education and

training of Bangladeshi citizens and officials and welfare of Bangladeshi expatriates;

Treatment of matters related with foreign refugees and descendants of those who

rendered services to Bangladesh abroad;

Collaboration with the Ministry of Information on external publicity;

Arrangement of press release on news/comments published in the foreign press about

the President and on matters having a direct bearing on President in consultation with

the Ministry of Information;

Implementation of matters relating to the establishment of diplomatic, consular and

Trade Missions in Bangladesh and their immunities;

Dealings in the matters of piracies and crimes committed on the high seas or in the

air;

Arrangement of hospitality grant of the Government of Bangladesh;

Discharge of diplomatic flight clearances for non-scheduled chartered flights of

foreign civil and military aircraft transiting Bangladesh;

Promotion of the matters relating to continental shelf, territorial waters, contiguous

zones and questions of fishery rights in the high seas and other question of

international law;



Administration of training of diplomatic personnel and budgetary support to the

Foreign Service Academy;

Dealing with the matters pertaining to Bangladesh Institute of International and

Strategic Studies (BIISS);

Administration of the cadre B.C.S. (Foreign Affairs);

Maintenance of liaison with International Organizations and dealing in the matters

relating to treaties and agreements with other countries and world bodies according to

the allocation of business;

Consultation with the Ministry of Law in all legal matters; Consultation with the

concerned Ministries in all other relevant matters.

(Source: Ministry of Foreign Affairs, Dhaka Bangladesh government website)

4.10. Costs of Doing Business

The cost of doing business in Bangladesh is highly competitive in comparison to

other economics in the region. The following table summarizes the relevant costs

typically incurred by businesses.

4.10.1. Summary of Business Costs

Table 16: Summary of Business Costs

Land US$

Average price of developed land in the different industrial belts varies

depending on location (price per square meter).

10.0-15.0

Construction

Average per square meter 100-125

Gas tariff

Average per '000 meter 64

Power tariff

Average per kW/h 0.07

Human resources: labor force

Average per month depending on skill level 50-100



Human resources : management salaries

Mid-level: average US$ per month depending on the skills and

experience

400-500

Top-level: average US$ per month depending on the experience 1000-2500

Sea freight (in US$ approx.)

Destinations 20'FCL* 40'FCL

Major European ports `900 1,800

USA - east coast (NY) 2,000 900

USA - west coast (LA) 1,900 2,550

Canada (Toronto/Montreal) 2,700 3,700

Australia (Melbourne) 800 1,600

New Zealand (Auckland) 1,250 2,400

Hong Kong 500 900

UAE (Dubai) 800 1,600

Tax structure

Personal income:

On the first Tk. 165,000 Nil

On the next Tk. 275,000 10%



On the balance 25%

Corporate income:

Publicly traded company 27.5%

Non-publicly traded company 37.5%

Bank, insurance and financial company 45%

Mobile phone operator company 45%



* FCL=Full Container Load

Note: The above costs are for reference purpose only. For specific and detailed information,

you may contact relevant service agencies, business consultants etc.

4.11. Human Resources

Bangladesh gains its competitive edge mainly from its low labor costs of semi-skilled

workers. The country has an adequate pool of semi-skilled as well as unskilled workers

who are willing to work at very competitive rates, thus enabling Bangladesh to penetrate

deep into the hearts of the international markets, with comparative and competitive cost

advantages.

The government supports the principle of fair wages to the workers linked to

increased levels of production. Wages may be fixed through collective bargaining

processes. In case of inadequacy of the collective bargaining procedure, wages can be set

by the Minimum Wages Board. The Minimum Wages Board strives to ensure a balanced

view of both the interests of the management and the workers. The following examples

indicate the average monthly basic wages and fringe benefits in US$ per worker in a

private sector organization. In the final analysis, wages and others compensations are

market set.

Table 17: Skilled Measurement

Wage (monthly in US$) Unskilled Semi-skilled Skilled

Basic wages 30 50 70

Fringe benefits 20 25 30

Total 50 75 100

Source: Bangladesh Gadget, Oct 31, 2010, Labour & Employment Ministry of Bangladesh

4.11.1. Utilities

Electricity

Generation, transmission and distribution of electricity in Bangladesh is the

responsibility of the Bangladesh Power Development Board (BPDB). In Bangladesh,



electric power is generated in hydro, steam, gas-turbine and diesel power plants, all the

generating stations are interconnected through a national grid. The Dhaka Electric

Supply Authority (DESA) started operation to maintain uninterrupted supply of

electricity in the capital city. The industrial consumption rate of electricity varies from

Tk.5.15 to Tk. 8.87 per kW depending on the size of the industries, load capacity and

peak/off peak hour consumption.

Key Statistics

Total installed capacity 6658 MW February, 2011

Maximum generation 4699 MW February, 2011


Gas

Natural gas supply is available in major industrial areas of Dhaka and Chittagong

Divisions. Gas tariff for industrial consumption is Tk. 165.91 (US$ 2.02) per MCF

including supplementary duty and VAT.

Table 18: Current Gas Tariff

Consumers Rate (US$/MCF*)

Electric suppliers 0.97

Fertilizer industries 0.89

Captive power, SPP 1.44

Other industries 2.02

Tea garden 2.02

Commercial 3.27

* As of May, 2012 dollar conversion rate (1 US$ = 81.92 Tk)

Source: Titas Gas Transmission and Distribution Company Limited

Water and Sewerage

Water is supplied by the Water Supply and Sewerage Authority (WASA) in

metropolitan areas of Dhaka and Chittagong. For other municipal areas the local



municipalities are responsible for the task. Dhaka WASA supplies fresh water to the city

consumers at the following rate:

Table 19: Water tariff

Metered connection (rate in US$*)

Period Commercial Industrial

From To Gallon Liter Gallon Liter

01-08-2011 To date 1.02 0.27 1.02 0.27

* As of May, 2012 dollar conversion rate (1 US$ = 81.92 Tk)

Source: Dhaka Water Supply and Sewerage Authority

The sewerage bill is equal to water bill for those that have a sewerage connection.

The consumer, who does not have a sewerage connection but there is sewerage main line

within 100 ft from the respective premise, is obliged to pay at rate of 15.51 to municipal

valuation annually as sewerage bill.

Telecommunications

Comprehensive telecommunications services such as fully automatic telex, fax, e-

mail, internet, telephone including international direct dialing are available with

important international carriers. The total number of mobile phone active subscribers has

reached 90.636 million at the end of April 2012.

Table 20: Mobile phone subscribers in Bangladesh

Operators Active Subscribers (m)*

Grameen Phone Ltd. (GP) 37.748

Robi Axiata Ltd. (Robi) 18.243



Orascom Telecom Bangladesh Ltd. (Banglalink) 25.008

Pacific Bangladesh Telecom Ltd. (Citycell) 1.801

Teletalk Bangladesh Ltd. (Teletalk) 1.295

Airtel Bangladesh Ltd. (Airtel) 6.538

Total 90.636

* The above subscribers’ numbers are declared by the mobile operators as of April 2012.

(Source: Bangladesh Telecommunication Regulatory Commission)

4.12. Taxation

4. 12.1. Personal Tax Rates

Table 21: Personal Tax Rates

Income level (Taka) Rate Remarks

a. On the first Tk. 165,000 0% Female tax payers & elderly

persons (65 Yrs & above): Tk.

180,000

b. On the next 275,000 10%

c. On the next 325,000 15%

d. On the next 375,000 20%

e. On the balance 25% Rebate opportunity for those

f. Minimum tax (of total income) for

all in the "individual" category

Tk. 2,000

g. Non-resident individual (other than

non-resident Bangladeshi)25%

Source: National Board of Revenue

4. 12.2. Corporate Tax Rates

Table 22: Corporate Tax Rates



Company/business Rate Condition/rebate

a. For publicly traded

companies (except bank,

insurance, leasing & other

financial institutions)

27.5% a. Any listed company declares dividend at

20%, or higher, will benefit from tax

abatement at 10%.

b. Any listed company which declares a

dividend at 10% or lower, or does not

distribute a dividend by the date declared by

the SEC*, will be required to pay tax at

37.5%.

b. For non-publicly traded

companies (except bank,

insurance, leasing & other

financial institutions)

37.5%

c. Bank, insurance, leasing

& other financial

institutions

45%

d. For mobile phone

operator companies

45% If the mobile phone operator company

transforms to a publicly traded company

offering at least 10% of paid up capital in an

IPO, then the tax rate will be 35%.

e. Dividend or profit

withholding

15% For foreign investment, it is based on

existence of a bilateral tax convention with

the investors' country.

f. Expatriates in

Bangladesh (Not NRBs**)

25%

Minimum corporate tax Tk. 5,000

Source: National Board of Revenue

4. 12.3. Avoidance of double taxation agreement

There are agreements on avoidance of double taxation between Bangladesh and

28 countries which are:-

(1) United Kingdom of Great Britain and Northern Ireland, (2) Singapore (3)

Sweden (4) Republic of Korea (5) Canada (6) Pakistan (7) Romania (8) Sri Lanka (9)



France (10) Malaysia (11) Japan (12) India (13) Germany (14) The Netherlands (15)

Italy (16) Denmark (17) China (18) Belgium (19) Thailand (20) Poland (21)

Philippines (22) Vietnam (23) Turkey (24) Norway (25) USA (25) Indonesia (27)

Switzerland (28) Oman

*SEC=Securities and Exchange Commission

**NRBs=Non-resident Bangladeshis

(Source: National Board of Revenue, Bangladesh)

Documents

CHAPTER 4 DATA FINDINGS 4.1. Overview of FDI in Bangladesh